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Hedging Corn and Soybeans

RSS By: Howard Tyllas, AgWeb.com

Howard Tyllas is currently a member of the Chicago Board of Trade and registered with the Commodity Futures Trading Commission as a floor broker and as a Commodity Trading Advisor.

November Soybean, December and September Corn Daily Numbers & Trade Ideas for 8/10/11

Aug 11, 2011

This report was sent to subscribers on 8/9/11 6:10 p.m. Chicago time to be used for trading on 8/10/11.

November Soybeans

After the close recap on 8/10/11: My resistance was 13.22 3/4, .04 1/4 from the actual high, and my pivot acted as support and was 13.02, .03 3/4 from the actual low.

December Corn

After the close recap on 8/10/11: My resistance was 6.97 1/2, .02 1/4 from the actual high, and my pivot acted as support and was 6.89, .03 from the actual low.

September Corn

After the close recap on 8/10/11: My resistance was 6.87 3/4, .01 1/2 from the actual high, and my pivot acted as support and was 6.76 1/2, .03 from the actual low.

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November Soybeans

13.45 ¼ FG
13.22 ¾
--------------13.02 Pivot 12/31/10 settle was $13.08 ¼
12.82
12.51

Trend
5 day chart... Down from last week same day
Daily chart .... Sideways
Weekly chart ... Up
Monthly chart Up $13.11 ½ is the 200 DMA
ATR 26 Oversold 17%

November Soybeans Chart

Uptrend line is pivotal; yesterdays high and low provide numbers. Tonight, the gap higher open low is exactly above the uptrend line. Last bar on the right, you can see what I am saying.

In my daily soybean numbers on Tuesday; my resistance was .03 ¾ from the actual high; my support was .04 from the actual low.


December Corn

7.13 FG
6.97 ½
-----------6.89 Pivot
6.80 ½
6.65 ½


5 day chart........ Up from last week same day
Daily chart ...... Sideways
Weekly chart .......Up
Monthly chart .... Up 6.09 is the 200 DMA
ATR 22 ½ Balanced 43%

December Corn Chart

I still say "Gap at $7.13 resists and then the 2011 high at $7.23. Adjusted steep uptrend line is now pivotal, daily numbers support".

In my daily December corn numbers on Tuesday; my resistance was .04 ¼ from the actual high; my support was .03 ¼ from the actual low.


September Corn

6.93 FG
6.87 ¾
-------------6.76 ½ Pivot
6.65 ¼
6.58 ½ XX

ATR 21 Balanced 50% 200 day MA 6.40



NO MATTER THE TRADE IDEA, I ALWAYS
PLACE MY STOP AT THE SAME TIME I PLACE
MY ENTRY ORDER.

September Corn Chart

8/10/11: Uptrend line is resistance now, this week's high resists. Daily numbers support.

In my daily September corn numbers on Tuesday; my resistance was .03 ¼ from the actual high; my support was .03 from the actual low.

8/10/11:

Grains: Spot on numbers! No question the grain markets as well as most commodities were taking their cues from the equities market, being pulled down until the equities started to climb out of the hole they were digging overnight. Both corn and soybeans should try to be in the middle of the recent high and low, before the report on Thursday.

If I am right that the USDA will come out with a bearish corn report, we could be testing the low just made. Analysts who believe damage was done to the corn crop might be right in time, but it is too early for the USDA to reflect on this report. So even if they do not lower it, the market might ignore the report thinking as I do that it will be reflected in the September, October, or November report. Even then they could be wrong, and they already priced it in a production shortfall. The weather market appears to be over for now, and that should take some of the courage out of the bulls to press the market higher. I believe the PRC will be there to buy grains when they are cheap, but they have not done much when at these levels.

I urge all my producers to buy back the November soybean $15/$16 call spreads today, most have made $.10 to $.18 profit and they cannot do you any good with almost 3 months until expiration and worth only $.05 on the close Tuesday. I think it prudent to buy extended coverage on at least ½ your corn hedge down to $5 today. The $5.90/$5 put spread settled at $.12 and 5/8 for an example of cost right now (about 14%).

"I do not have a bias and want to only take day trades that risk $.06 in corn and $.08 in soybeans, and would trade less than my normal contract size". I would not take home a position going into the report tomorrow, but if I was asked to guess, I would be short.

8/9/11:

Grains: Spot on numbers! Even though I used the same numbers as used on Friday for December corn as some of the other markets I cover, they were solid support and resistance numbers for Monday. They did not know about the S&P downgrade even though I did, and another example why I say "I do not care what drives the market to a number; I just want to exploit the fact that it did". Support is always support, even though if the market opens (or trades below) and trades below that number for 5 minutes, it becomes resistance. If above a resistance number it becomes a support when above it. Same chart rule applies to my bracket and trend lines. I said "Outside markets are definitely in play right now, and no matter the fundamentals of any commodity, it can fall victim to what is going on in Washington and around the world".

Talk about exports or crop progress, nix for help here! 2% decline in corn crop conditions, and a 1% improvement in soybean progress. Chicago would like to send Texas some of our rain; we have seen more rain this year than anytime going back 50 years. No corn grown here, but somewhere nearby would expect would have record yields. Estimates out today from "the big survey of analysts" with an average of 155.6 BPA for corn and 42.8 for soybeans, what is your guess? My guess it will come out higher for both corn and soybeans, and the market will say they do not believe it no matter what numbers come out! I trade charts and numbers, and try to take advantage of opportunities with minimum risk for a good reward.

No matter what the grain fundamentals are right now, the magnet of outside market will drag grains lower even though they will struggle and fight not to go that way. S&P is down 29.00 as I write this. Even with lower production numbers resulting in tight supplies, you must understand that we have 13 months left in the marketing year to ration demand. The market will not feel the need to chase it higher with so much time left. I do not get excited if the market goes up or down, make money or not, it's just another trading day! If you are getting emotional, do something about it, hedge more downside, and speculators should reduce contract size until the amount is insignificant in relation to your account size. Many new members are forced to sell their seats because emotional traders lose control and are "accidents waiting to happen" and die/bust out at an alarming rate.

1 week after the report on the 11th December corn could be trading $7.23 or $6, because if bullish and the outside markets stabilize, corn can easily make new 2011 highs if production truly becomes a threat. I would want to take some profits on soybean call spreads my hedgers are short (some did not buy back last time, and some have resold calls again looking to take profits a second time) and allow some upside because the upside has a 50/50 chance since uncertainty will remain until the combines get rolling. When you review my strategy all year, I have maintained .....subscribe now!..., and rolled up to capture December corn short futures contracts at $7 locked in. Most call spreads were either sold there to begin with, or rolled up as the market moved higher. Producers know very well where they started and ended their original hedge, and the windfall profits locked in since then. I want all of you to have SOME upside open, but if not, most are short only $.60 call spreads, so if the market moves up $3 from here ($10 December corn), they get $2.40 of it! At some point if they do rally, instead of just looking at more profits, they must "lock that in" and give up some of what the market gave you to retain it if we do go back down. Consider to buy back corn call spreads and take profits if we do get down to the $6 level, and if for whatever reason we do rally again, you can resell them. I have the same thoughts as yesterday when I said "I do not have a bias and want to only take day trades that risk $.06 in corn and $.08 in soybeans, and would trade less than my normal contract size.

Speculators: This week produced many emails from subscribers who have done well from being able to get away from old habits that were not producing results, and adopting some of my approach, way of looking at the chart, and rethinking the need of fundamentals. I do not take credit for anyone's trading success or failure, but I do take credit for providing the best numbers I have seen year in and year out in my career. The numbers and how I derive them, formation and lines that are meaningful to me, are the same as I have produced for 35 years now. You take 100% credit because YOU are the person who decides how and when to trade, and YOU must execute it. I can tell you everything needed to hit the ball (money management, mindset, risk/reward, charting); YOU must take credit for swinging the bat. From the 4 years I have done this service, I lose few subscribers, have brokers and brokerage firms in the US and other countries, university professors in finance, and that proves to me I am helping people learn and become better traders and hedgers. 

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May Your Next Trade Be The Best


Howard Tyllas

Tel.1-312-573-2699, 1-312-823-9189

Disclaimer: No guarantee of any kind is implied or possible where projections of future conditions are tempted. Futures trading involve risk.In no event should the content of this be construed as an express or implied romise, guarantee or implication by or from Howard Tyllas, that you will profit or that losses can or will be limited in any manner whatsoever. No such promises, guarantees or implications are given. Past results are no indication of future performance.

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